What was the total value of Black Bear Diner's related-party receivable as of December 28, 2022?
Black_Bear_Diner Franchise · 2025 FDDAnswer from 2025 FDD Document
nse agreement that requires BTH to pay a 4.50% royalty to the Company. The Company recognized $8,041,863 and $7,600,569 of royalty income from BTH for the years ended December 27, 2023 and December 28, 2022, respectively, which is included in the statements of income.
Allocated Administrative Services: The Company also shares certain management and administrative functions with BTH. The Company charged BTH the amount of $3,153,562 and $2,983,206 for allocable share of management and administrative expenses and is rec for the years ended December 27, 2023 and December 28, 2022, respectively, which is included with payroll and benefits expenses in the statements of income.
Related-Party Receivable: The related-party receivable is unsecured, interest free and repayable on demand. The related-party receivable at any point in time generally consists of any combination of receivables from royalty and advertising fees, receivables
Source: Item 23 — RECEIPT (FDD pages 56–243)
What This Means (2025 FDD)
According to Black Bear Diner's 2025 Franchise Disclosure Document, the related-party receivable includes receivables from royalties and advertising fees, allocations of shared management and administrative functions, gift card receivables from Bear Tracks Holdings LLC (BTH) restaurants, and periodic working capital advances to entities under common control. As of December 28, 2022, the allocated administrative services receivable included within the related-party receivable totaled $226,604. These amounts were fully collected after the year ended.
For a prospective franchisee, this indicates the level of financial interaction Black Bear Diner has with its related entities. Understanding the nature of these related-party transactions and how they are managed is crucial for assessing the financial stability and transparency of the franchise system. The fact that the outstanding amounts were collected in full subsequent to the year-end suggests efficient management of these receivables.
It is important to note that the related-party receivable is unsecured, interest-free, and repayable on demand. This arrangement could present a risk if the related parties face financial difficulties, potentially impacting Black Bear Diner's cash flow. Prospective franchisees should inquire about the policies and procedures in place to manage related-party transactions and the potential risks associated with these transactions.